'Could have done more'

Flaherty focuses on creating jobs, cutting the deficit

OTTAWA -- When it comes to the world economy, Finance Minister Jim Flaherty is singing the same song again.

joe bryksa / winnipeg free press
Estimates say nearly one-third of all Canadian businesses are dealing with a shortage of skilled labour.

Last year, the opening lines of his budget section on the economy began by saying, "The global economic environment remains highly uncertain." This year, the same section started out by saying, "The global economic environment remains fragile."

"Make no mistake, there are still significant risks ahead," Flaherty also said in his budget speech, and, "This makes our job more difficult."

His budget Thursday aims to pull Canada out of deficit mostly on economic growth, even though he readily admits things are shaky.

Europe is still in recession and the debt crises plaguing much of the eurozone have not entirely been solved. The United States seems to be rebounding when it comes to housing prices and consumer spending, but the political uncertainty around its debt and spending plans leave it vulnerable.

Canada, ever reliant on the world economy to buy our oil, gobble up our food, and line up to buy our manufactured goods, can only do so much on its own.

And the picture in recent months isn't really getting rosier.

The Organization for Economic Development recently predicted Canada's place at the head of the pack in economics is coming to a close. GDP growth is down in 2012 and 2013.

But Flaherty is not deterred from his goal of balancing the books by 2015 and says this budget was all about keeping Canada fiscally responsible for the just-in-case scenarios down the road.

What is he doing about the economy at home?

One job at a time

If there was one theme of pre-budget consultations, Flaherty said it was job training, and the mismatch between what Canadians are being trained to do and what jobs are actually available.

CIBC World Markets estimates nearly a third of all Canadian businesses are facing a skilled-labour shortage.

An estimated 95,000 professional engineers are expected to retire by 2020. More than 100,000 new mining workers will be needed in the next 10 years, and the construction industry will need 319,000 new workers by 2020. Information Technology needs about 17,000 new workers a year.

At the same time, there are still 1.3 million unemployed Canadians.

The Canadian Federation of Independent Business found 34 per cent of small and medium-sized businesses say the skilled-labour shortage is hampering their growth. In particular, businesses have trouble finding electricians, carpenters, machinists, heavy equipment operators, engineers and architects.

Flaherty said that to respond to these problems, he is introducing the New Canada Job Grant, a $500-million plan to get the federal and provincial governments partnering with business to train Canadians to do the available jobs.

The plan requires equal contributions from employers and the provinces and will provide up to $15,000 per person, for job training which will match skill needs of employers. The specifics of the grant are still to be negotiated with the provinces, as Ottawa seeks to renegotiate $500 million in annual transfers to the provinces under Labour Market Agreements. "This will transform the way Canadians receive training," said Flaherty.

"This is to make sure employers are engaged in training people so the outcome at the end of the day is jobs for people."

Painting the red door black again

Flaherty almost looked wistful as he remembered a time when budgets weren't laden with red ink, and wouldn't yet say what he will do when he finally has money to spend again.

"My priority is to get there," he said. "We used to be there in 2006, 2007... I think it's important to get back there."

His plan to get there does not rely hugely on any new spending cuts, nor, as Flaherty repeatedly stresses, will he do what the Liberals did in the 1990s and slash transfers to the provinces for health care and social programs or by cutting direct benefits to individuals.

Although, he notes, that makes it tougher.

But Flaherty said he is "very confident" he will meet the target to have an $800-million surplus by 2015-16.

"We could have done more," he said. "We chose not to because it's not necessary to do so."

Flaherty's plan to return to surplus relies almost solely on holding direct federal program spending in check and hoping the economic forecasts for the coming years come true.

GDP growth for 2013 is now forecast at a relatively slow 1.6 per cent, down from 2.0 per cent five months ago, and 2.7 per cent a year ago. However, for the next few years, the average private sector forecast for GDP growth has stayed mostly with what the estimate was last year.

Low prices for Canadian commodities, particularly crude oil, have hurt a lot, eating up to $4 billion annually from federal revenues, and $28 billion from the GDP.

Flaherty acknowledged he cannot predict, nor can anyone, what will happen for sure in the next few years.

But Flaherty said what he is doing is keeping the spending he can control in check to put Canada on the best footing possible.

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